SABMiller and Tsogo Agree Transaction

12th Dec 2002

London and Johannesburg, 12 December 2002. SABMiller plc, (SABMiller), a leading force in global brewing, and its gaming joint venture partner, Tsogo Investment Holding Company (Proprietary) Limited (Tsogo Investments), today announced the most important empowerment deal yet in the South African hospitality sector.

The agreement will result in the transfer of both companies` interests within the hotel and gaming sectors into a new company, to be named Tsogo Sun Holdings (Proprietary) Limited (TSH), which is to be controlled by Tsogo Investments. Today`s announcement, which follows SABMiller`s review of its options for its non-core hotel and gaming interests, will be beneficial to its shareholders. The transaction is subject to certain conditions, including obtaining Gaming Board and other regulatory approvals, and the finalisation of funding arrangements. It is expected to complete in the first quarter of 2003 and will be earnings neutral for SABMiller in the first full financial year following completion.

Commenting on the transaction, Graham Mackay, Chief Executive of SABMiller said: “This represents an important empowerment transaction for South Africa and a further step in our strategy of focusing SABMiller as an international beer and beverage group.

“We are delighted with the development of our partnership with Tsogo Investments and are pleased to see it enter a new phase with this transaction.
“Over the medium term, SABMiller intends to continue to reduce its investment in hotels and gaming, in keeping with its strategy to divest of non-core interests.”

Ashley Mabogoane, Chairman of Tsogo Investments said, “The formation of TSH represents a major step for Black Economic Empowerment (BEE) and will substantially contribute to the transformation of the hotel and gaming industries within the context of the government`s national BEE agenda.”


Commenting on today`s announcement, Valli Moosa, the South African Minister for Environmental Affairs and Tourism, said: “This represents a landmark BEE transaction for SABMiller, Tsogo Investments and South Africa. It is also a milestone for BEE in the tourism industry, representing the largest BEE transaction to be concluded in this increasingly important sector of the South African economy.”

In terms of the transaction, SABMiller will contribute its entire hotel and gaming interests, including 100% of Southern Sun`s hotel interests and 50% of Tsogo Sun`s gaming interests, to the new company, TSH, in exchange for ordinary shares representing 49% of TSH and R400 million (US$44 million) of TSH redeemable preference shares. SABMiller will be afforded appropriate minority protections.

Simultaneously, Tsogo Investments will contribute its entire gaming interests, including 50% of Tsogo Sun to TSH in exchange for ordinary shares representing 51% of TSH. The book value of assets transferred by SABMiller to TSH is approximately R734 million (US$82 million). This is post a cash distribution of R750 million (US$83 million) payable to the SABMiller group. TSH will be accounted for as an associate of SABMiller plc.

It is envisaged that the hotel and gaming operations will trade as two independent subsidiaries of TSH and that these will be run by the existing management teams, with Jabu Mabuza, Chief Executive of Tsogo Sun Casinos and Helder Pereira, Chief Executive of Southern Sun Hotels, reporting to Ron Stringfellow, the TSH Group Chief Executive. Ashley Mabogoane will be Chairman of TSH.



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